Mumbai: The chemicals and fertilizer unit of the Tata group, Tata Chemicals Ltd, on Thursday posted a 33% increase in second quarter net profit, driven by robust demand and a recent acquisition in the US that offset a currency exchange loss. Profit rose to Rs277.7 crore in the three months ended 30 September on a 169% increase in sales to Rs4,661 crore, said Tata Chemicals, which recently purchased US-based General Chemicals Industrial Products Inc.
The profit was limited by a notional currency exchange loss of Rs167.45 crore resulting from the increased interest cost on a $475 million (Rs2,342.5 crore at current rates) external commercial borrowing.
Still smiling: P.K. Ghose, executive vice-president and CFO, said both business segments of the company saw a growth in sales. Ashesh Shah / Mint
“Considering the increased demand and consequent sales growth in both the business segments, chemicals and fertilizers, in the globally spread markets, we could have posted a much higher profit during this period,” said P.K. Ghose, executive vice-president and chief financial officer.
The present liquidity crunch has forced the company to put on hold some expansion projects that are not in a position to deliver quick returns.
R. Mukundan, executive vice-president in charge of its chemicals business, said the company had proposed several projects, including the completion of a bio-ethanol plant, during the year. The total cost was estimated at Rs500 crore.
“We will go ahead (with), rather expedite, only the projects which are nearing completion or with a short gestation period, now,” Mukundan said. “But all other plans...will be postponed till the market condition gets stabilized.”
Tata Chemicals’ stock price, which closed at Rs133.45 on Thursday, has fallen 20.92% this quarter, while the Sensex has fallen 4.47% in the same period.